Negotiable Instruments Act


The Internet is taking control of all the major daily activities. In the Banking sector, most of the transactions are generally subject to the use of the Internet. One such use is the use of the Internet in the field of transfer of money. Transferring money from one place to another,  from one account to another has become so easy due to the use of the Internet. In this article, we will look at the 2 means of transfer of funds under the Banking system, viz- NEFT and RTGS.

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What is NEFT?

The NEFT means National Electronic Funds Transfer. It is a famous electronic fund transfer model wherein any person can transfer funds from any account to any account (belonging to any bank).

This system was started in India in 2005. It allows the individuals, companies, firms, and corporations to transfer the funds from any place to anywhere in India without actually going to that place.


It is a very suitable mode of online payment which is available at an economical rate. Moreover, the settlement time is very less as compared to other modes of payment. Also, it makes the online transactions of small value at a much reasonable rate.

Browse more Topics Under Negotiable Instruments Act

What is RTGS?

RTGS means Real-Time Gross Settlement. It enables money to transfer from one bank to another on a gross and real-time basis. In general terms, real-time means the beneficiary bank receives the instructions for fund transfer immediately and gross means that transactions happen individually (without accumulation). The special aspect of this mode of payment is that payments are final and irrevocable due to entry in the books of RBI.


There are various differences between NEFT and RTGS. We will study it on the basis of various basis, which is as follows:

1. Need for Bank Account

Customers who have savings or current A/c are eligible to avail NEFT/ RTGS services. For the individuals who do not have a bank account, there is a cash deposit facility at the NEFT-enabled branches. However, there is a restriction of Rs. 50,000 per transaction.

2. RTGS Timings  and Neft Timings

The RTGS facility is available from 8 am to 16:30 pm on weekdays and working Saturdays. In the case of NEFT, there are 12 settlements from 8 am to 7 pm. However, these timings are subject to changes on the basis of the customer’s general routine of availing the services.

A customer can avail service of Online RTGS only within the mentioned cut off time. In case of online NEFT, if the transaction is beyond the specified time then the funds will be transferred to the beneficiary bank on the next working day.

3. Minimum Amount

RTGS facility is meant for large amount transactions. For retail customers, the minimum amount of transfer through RTGS is Rs. 2 lakh. There is no minimum requirement of the amount in case of NEFT.

4. Failure of E-transaction

In RTGS transactions, if due to any reason – such as when the account does not exist or is frozen – it is not possible to transfer the funds to the beneficiary customer’s account, the money is credited into the sender’s account once the bank receives the money back. The amount is returned to the originating bank account within one hour or before the end of the RTGS business day, whichever is earlier.

In NEFT transactions, destination banks are required to return the fund to the originating branch within 2 hours of completion of the batch in which the transaction process is done.

Solved Question on NEFT and RTGS

Question: What are the charges under RTGS and NEFT?

Answer:  In NEFT, charges don’t exceed Rs. 25 (excluding service tax) per single transaction while for RTGS it does not exceed Rs. 55 (excluding service tax). These charges are typically lower in case of internet banking as compared to the transaction through bank branches.

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One response to “Bills of Exchange”

  1. Neelam says:

    Maker is a creditor while payer is a debtor.

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